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FTSE rebounds as Shire shines after fresh bid

by Daniel Grote on Jul 14, 2014 at 10:48

FTSE rebounds as Shire shines after fresh bid

The FTSE has jumped as investor optimism takes hold following a tough week for shares, with fresh mergers and acquisition activity in the pharmaceutical sector helping to boost sentiment.

The FTSE 100 rose 55 points, or 0.8%, to 6,745 points, with Shire (SHP) amongst the biggest gainers, up 123p, or 2.5%, at £49.93, after the pharmaceutical group said it was ready to recommend a revised takeover bid from US rival AbbVie (ABBV.N) to shareholders.

AbbVie made the new bid, its fifth, on Sunday, at £53.20 per share, up from its previous £51.15 offer. Shire said in a statement to the market: ‘The board of Shire has indicated to AbbVie that it would be willing to recommend an offer at the level of the revised proposal to Shire shareholders. Accordingly, the board is in detailed discussions with AbbVie in relation to these terms.’

Sports Direct (SPD) was the biggest riser, adding 30p, or 4.3%, to 728p after announcing a partnership with MySale Group (MYSL) to launch in Australia and New Zealand. Sports Direct products will be sold through MySale Group’s online retail website OzSale.com.au.

Tesco (TSCO) and Aviva (AV) meanwhile rose following broker upgrades. Tesco added 5.2p, or 1.9%, to 283.3p after Cantor raised the supermarket from ‘sell’ to ‘buy’, upping its target price from 282p to 325p. Aviva jumped 5.1p, or 1%, to 495.1p after Goldman Sachs and Deutsche Bank both raised their target prices for the insurer, to 490p and 545p respectively.

Hargreaves Lansdown (HRGV) added 16p, or 1.4%, to £11.40, having seen its shares fall by 11% last week after the online stockbroker was hit by the woes afflicting the financial sector.

Portugal’s Banco Espirito Santo (BES.LS) has continued to drop, falling 8.1% to €0.44 after parent Espirito Santo Financial Group (ESFG) announced it was selling nearly 5% of its stake in the bank in order to fulfil debt obligations.

The bank had plunged 17% last Thursday amid concerns over ESFG’s failure to meet interest payments on some of its short-term debt securities, prompting Portugal’s stock market regulator to suspend the shares. The suspension has since been lifted.

‘Small cap’ stock Huntsworth (HNTS) fell 9.4p, or 18.1%, to 43p, after the public relations group announced first half results would be below market expectations.

Among AIM stocks, Quindell (QPP) was a big riser, rising 20.2% to 214.5p after the beleaguered IT outsourcing and consultancy provider announced revenues for the first half of its financial year had more than doubled.

Shares in the company have been hammered over recent months after US-based Gotham City Research questioned the group’s revenue model and profit quality in April. Quindell is down 64.2% over the past three months.

Fellow AIM stock Progility (PGY) rose 22.7% to 7p after the project management group announced the acquisition of rival company Starkstrom.

The strong performance of global shares markets have taken its toll on the gold price, which had slid by as much as 1.6% in the morning’s trading before settling above the $1,320 mark. ‘Such a move to the downside hasn’t been seen for a few weeks and could make bulls a little nervous as they battle against a renewed call from Goldman Sachs for gold to hit $1,050 by year end,’ said Simon Smith, chief economist at FxPro.

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